Most parents want their children to understand the value of a dollar. Financial literacy is something that you’re never too young to learn and teaching children while they’re young how finances work is important. Whether your child earns an allowance, has a part-time job, or is often gifted money from relatives in lieu of gifts, opening a savings account for your child is a great way to help them learn about their money and how to best manage it. If you’ve been on the fence about when and why to open your child their very own savings account, here are 7 reasons why it’s a good idea.
Start Early
You’re never too young to learn about money, and opening a savings account for your child gives you the perfect opportunity to begin speaking to them about the value of saving. Many young children understandably don’t quite grasp the concept of money and having to pay for things so opening up an account for your child is the first step in teaching them about being financially responsible. Kids as early as elementary school age are old enough to begin to learn about the concept of their own personal finances.
Focus
Setting a goal for your child, whether it be saving enough to buy that new toy they have been coveting or a new game that just got released can be a great motivator when it comes to saving money. Your child can watch their funds grow in their bank account and save with specific goals in mind. Not only does having a savings account allow your child to set their own goals about what they want their savings to be spent on, but it also teaches them the importance of working towards a goal.
Value
Opening a savings account introduces your child to early financial literacy, which means they will learn the value of a dollar at a young age. When a child uses their bank account to save for something special, regardless of the cost, it teaches them that different items have different costs. They also learn about monetary value and helps them understand that money doesn’t grow on trees. When a child saves to buy an item themselves it helps them understand why saving is important and why we can’t always get everything we want.
Budgeting
A savings account is a great way to teach your child about the value of budgeting. It lets your child see just how much money they have, how long it took to earn and save it, and how much they need if they are hoping to buy a special item. It also teaches them how to prioritize, and lets them make their own decisions on whether they think something is worth saving and buying for.
Appreciation
There is nothing more frustrating than a child who truly doesn’t appreciate all that they have, which is why encouraging your child to save their money in a savings account is a great idea. When a child saves their own money to purchase something special they have a newfound appreciation not only for the item but for how long it took them to save. When children use their own money that they earned and saved to pay for something, it teaches them the value of the item and makes them appreciate it even more.
Math Skills
Getting children personally invested (pun intended) in their own savings account will not only get them excited about watching their account grow as they save money, but it will also teach them valuable math skills as they see how their money can work from them.
A savings account can help teach children about things like compound interest rates and the benefits of saving and investing their money. When children learn how to make their money work for them at a young age, it can set them up for a future of being fiscally responsible.
Banking Skills
Opening up a savings account for your child is one of the first times you can introduce your child to the world of banking. All banks have apps you can download on your phone which gives your child another way they can keep track of their account balance and see how much money they have saved. As they get older and their banking needs increase, they will feel more comfortable when they visit their local branch or need to open other accounts.
Teaching children about financial literacy is one of the best things you can do for a child. Giving them the ability to control their own finances at a young age is simple when they have their own savings account. Not only do you teach them how to budget and value the money they have, but you are also cultivating an interest early on in how to effectively manage their money. Teaching your child to manage their own money through a savings account is a life lesson that will never stop paying off.
